SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2002
Commission File Number 0-17555
EVEREST FUTURES FUND, L.P.
(Exact name of registrant as specified in its charter)
Iowa 42-1318186
State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1100 North 4th Street, Suite 143, Fairfield, Iowa 52556
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (641) 472-5500
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Part I. Financial Information
Item 1. Financial Statements
"Following are Financial Statements for the fiscal quarter ending June 30,
2002"
Fiscal Quarter Year to Date Fiscal Year
Fiscal Quarter Year to Date
Ended 6/30/02 to 6/30/02 Ended 12/31/01 Ended
6/30/01 to 6/30/01
Statement of
Financial Condition X X
Statement of
Operations X X X X
Statement of Changes
in Partners' Capital X
Schedule of Investments X
Notes to Financial
Statements X
"EVEREST FUTURES FUND, LP"
COMBINED STATEMENTS OF FINANCIAL CONDITION
UNAUDITED
"June 30, 2002" "Dec 31, 2001"
ASSETS
Cash and cash equivalents "8,870,604 " "20,938,678 "
Equity in commodity trading accounts:
Cash on deposit with brokers "12,879,916 " "8,768,736 "
Net unrealized trading gains on open contracts "7,089,431 "
"2,486,233 "
"Investments, at fair value" "16,394,074 " "9,988,541 "
Interest receivable "131,114 " "52,501 "
Total assets "45,365,140 " "42,234,689 "
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses "21,100 " "34,692 "
Commissions payable "127,245 " "157,564 "
Advisor's management fee payable "84,469 " "73,208 "
Advisor's incentive fee payable "985,668 " 0
Redemptions payable "5,711,746 " "118,786 "
Selling and Offering Expenses Payable "4,729 " 0
Total liabilities "6,934,957 " "384,250 "
Partners' Capital:
" Limited partners (20,033.06 and 24,907.39 units"
" outstanding at 6/30/02 and 12/31/01, respectively)" " 38,282,118 "
"41,519,565 "
(see Note 1)
General partners (77.48 and 198.49 units
" outstanding at 6/30/02 and 12/31/01, respectively)" " 148,066 "
"330,874 "
(see Note 1)
Total partners' capital "38,430,184 " "41,850,439 "
Total liabilities
and partners' capital "$45,365,140 " "$42,234,689 "
Net asset value per outstanding unit of Partnership
interest "$1,910.95 " "$1,666.96 "
See accompanying notes to financial statements.
"EVEREST FUTURES FUND, L.P."
COMBINED STATEMENTS OF OPERATIONS
"For the period January 1, 2002 through June 30, 2002"
UNAUDITED
"Apr 1, 2002" "Jan 1, 2002" "Apr 1, 2001"
"Jan 1, 2001"
through through through through
"Jun 30, 2002" "Jun 30, 2002" "Jun 30, 2001"
"Jun 30, 2001"
REVENUES
Gains on trading of commodity futures
" and forwards contracts, physical"
commodities and related options:
Realized gain (loss) on closed positions "4,837,765 "
"2,786,416 " "583,863 " "6,221,182 "
Change in unrealized trading gain (loss)
on open contracts "7,103,794 " "4,603,199 "
"(3,544,690)" "(4,779,005)"
Change in net unrealized gain (loss) on investments 0 0
"4,191 " "6,385 "
Net foreign currency translation gain (loss) "118,859 " "67,805 "
"(38,609)" "43,948 "
Brokerage Commissions "(538,556)" "(1,162,785)"
"(659,574)" "(1,286,464)"
Total trading income (loss) "11,521,862 " "6,294,634 "
"(3,654,819)" "206,046 "
" Interest income, net of cash management fees" "176,503 "
"366,857 " "476,410 " "1,093,146 "
Total income (loss) "11,698,365 " "6,661,491 "
"(3,178,409)" "1,299,192 "
General and administrative expenses
Advisor's management fees "226,803 " "453,776 " "159,574 "
"322,896 "
Advisor's incentive fees "985,668 " "985,668 " 0
"29,399 "
Administrative expenses "16,538 " "31,084 " "20,876 "
"30,435 "
Total general and administrative expenses "1,229,009 "
"1,470,528 " "180,450 " "382,730 "
Net income (loss) "10,469,355 " "5,190,963 "
"(3,358,859)" "916,462 "
PROFIT (LOSS) PER UNIT OF
PARTNERSHIP INTEREST $456.94 $243.99 ($128.90)
$34.25
(see Note 1)
See accompanying notes to financial statements.
"EVEREST FUTURES FUND, LP"
COMBINED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
"For the period January 1, 2002 through June 30, 2002"
UNAUDITED
Limited General
Units Partners Partners Total
"Partners' capital at Jan 1, 2002" "25,105.88 " "41,519,565 "
"$330,874 " "$41,850,439 "
Net profit (loss) "5,173,771 " "17,192 "
"5,190,961 "
Additional Units Sold 251.53 "478,792 " 0
"478,792 "
(see Note 1)
Redemptions (see Note 1) "(5,246.87)" "(8,890,009.84)"
"(200,000)" "(9,090,010)"
"Partners' capital at June 30, 2002" "20,110.54 "
"$38,282,118 " "$148,066 " "$38,430,184 "
Net asset value per unit
" January 1, 2002(see Note 1)" "1,666.96 " "1,666.96 "
Net profit (loss) per unit (see Note 1) 243.99
243.99
Net asset value per unit
"June 30, 2002" "$1,910.95 " "$1,910.95 "
See accompanying notes to financial statements.
"Everest Futures Fund, L.P"
Schedule of Investments
"June 30, 2002"
Number of contracts Principal (notional)
Carrying Value/ Value (OTE)
Long positions:
Futures positions (5.11%)
Interest rates "1,511 " $ "243,360,829 "
"1,553,174 "
Metals 387 "12,619,481 " "(174,484)"
Energy 292 "7,606,389 " "9,755 "
Agriculture 680 "10,219,217 " "345,042 "
Currencies 188 "37,736,413 " "231,962 "
Indices 0 0
"311,542,329 " "1,965,449 "
Forward positions (14.53%)
Currencies "195,069,343 " "5,585,777 "
Total long positions $ "506,611,672 "
"7,551,226 "
Short positions:
Futures positions (-0.69%)
Interest rates $ 0 0
Metals 230 "8,028,250 " "(139,069)"
Energy 143 "4,213,690 " "(89,025)"
Agriculture 415 "3,967,635 " "11,530 "
Currencies 0 0
Indices 186 "11,533,080 " "(50,094)"
"27,742,655 " "(266,658)"
Forward positions (-0.51%)
Currencies "70,685,237 " "(195,136)"
Total short positions $ "98,427,892 "
"(461,794)"
Total open contracts (18.45%) $ "7,089,432
"
Securities Held
Maturity Over 60 days (42.61%) Coupon Maturity
Cost
FANNIE MAE MED TERM NT 4.55% 7/23/03
"$1,011,544.74 "
FREDDIE MAC NOTE 4.45% 7/30/03 "$303,773.31 "
FANNIE MAE MED TERM NT 4.75% 4/17/03
"$506,647.88 "
FREDDIE MAC NOTE 2.250% 2/14/03
"$1,600,000.00 "
FANNIE MAE MED TERM NT 4.15% 8/28/03
"$252,332.29 "
FANNIE MAE MED TERM NT 4.25% 8/13/03
"$2,626,598.00 "
FANNIE MAE MED TERM NT 4.00% 8/21/03
"$1,513,350.00 "
US T-Bill TERM REPO 9/12/02
"$1,337,524.17 "
FANNIE MAE MED TERM NT 5.00% 2/14/03
"$735,989.97 "
FANNIE MAE MED TERM NT 5.75% 4/15/03
"$1,542,882.90 "
FED HM LN BK BOND 5.80% 9/18/02
"$407,255.95 "
FANNIE MAE MED TERM NT 5.750% 4/15/03
"$617,033.15 "
FANNIE MAE MED TERM NT 4.63% 5/15/03
"$2,641,630.29 "
FED HM LN BK BOND 5.53% 1/15/03 "$1,279,337.50 "
Total securities maturity over 60 days $
"$16,375,900.15 "
Cash and cash equivalents (23.08%)
"$8,870,603.95 "
Cash on deposit with brokers (33.52%)
"12,879,916 "
Less liabilities in excess of other assets (-17.66%)
"(6,785,668)"
Net assets (100.0%) $ "38,430,184 "
EVEREST FUTURES FUND, L.P.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2002
(1) GENERAL INFORMATION AND SUMMARY
Everest Futures Fund, L.P. (the "Partnership") is a limited partnership
organized on June 20, 1988 under the Iowa Uniform Limited Partnership Act
(the Act). The business of the Partnership is the speculative trading of
commodity futures contracts and other commodity interests, including forward
contracts on foreign currencies ("Commodity Interests") either directly or
through investing in other, including subsidiary, partnerships, funds or
other limited liability entities. The Partnership commenced its trading
operations on February 1, 1989 and its general partner is Everest Asset
Management, Inc. (the "General Partner") a Delaware corporation organized in
December 1987.
The Partnership was initially organized on June 20, 1988 under the name
Everest Energy Futures Fund, L.P. and its initial business was the
speculative trading of Commodity Interests, with a particular emphasis on the
trading of energy-related commodity interests. However, effective September
12, 1991, the Partnership changed its name to "Everest Futures Fund, L.P."
and at the same time eliminated its energy concentration trading policy. The
Partnership thereafter has traded futures contracts and options on futures
contracts on a diversified portfolio of financial instruments and precious
metals and trades forward contracts on currencies.
The initial public offering of the Partnership's units of limited partnership
interest ("Units") commenced on or about December 6, 1988. On February 1,
1989, the initial offering period for the Partnership was terminated, by
which time the Net Asset Value of the Partnership was $2,140,315.74.
Beginning February 2, 1989, an extended offering period commenced which
terminated on July 31, 1989, by which time a total of 5,065.681 Units of
Limited Partnership Interest were sold. Effective May 1995 the Partnership
ceased to report as a public offering. On July 1, 1995 the Partnership
recommenced the offering of its Units as a Regulation D, Rule 506 private
placement, which continues to the present with a total of $75,533,391 for
42,987.72 Units sold July 1, 1995 through June 30, 2002. On March 29, 1996,
the Partnership transferred all of its assets to, and became the sole limited
partner of, Everest Futures Fund II, L.P. (Trading Partnership)), a newly
formed limited partnership that invested directly in commodity interests.
The co-general partners of the Trading Partnership were CIS Investments, Inc.
(CISI) and the General Partner (collectively, the General Partners). In July
2000, the Partnership redeemed approximately 50% of its assets from the
Trading Partnership. Effective as of the close of business August 31, 2000,
the Partnership liquidated its remaining investment in the Trading
Partnership. CISI also liquidated its investment in the Trading
Partnership and the Trading Partnership was dissolved in September 2000.
The Partnership clears all of its futures and options on futures trades
through Cargill Investor Services, Inc. (CIS), its clearing broker, and all
of its cash trading through CIS Financial Services, Inc. (CISFS), an
affiliate of CIS.
On September 13, 1996 the Securities and Exchange Commission accepted for
filing a Form 10 -- Registration of Securities for the Partnership. Public
reporting of Units of the Partnership sold as a private placement commenced
at that time and has continued to the present.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
Prior to the dissolution of the Trading Partnership, the accompanying
financial statements were prepared on a combined basis and included the
accounts of the Partnership and the Trading Partnership. All significant
intercompany transactions and balances have been eliminated in the
accompanying financial statements. Certain prior year amounts have been
reclassified to be consistent with the current year presentation.
Cash and Cash Equivalents
Cash equivalents represent short-term highly liquid investments with
remaining maturities of 60 days or less and include money market accounts,
securities purchased under agreements to resell, commercial paper, and U.S.
Government and agency obligations with variable rate and demand features that
qualify them as cash equivalents. These cash equivalents, with the exception
of securities purchased under agreement to resell, are stated at amortized
cost, which approximates fair value. Securities purchased under agreements to
resell, with overnight maturity, are collateralized by U.S. Government and
agency obligations, and are carried at the amounts at which the securities
will subsequently be resold plus accrued interest.
Fair Value of Financial Instruments
The financial instruments held by the Company are reported in the statements
of financial condition at market or fair value, or at carrying amounts, which
approximate fair value, because of their highly liquid nature and short-term
maturity.
Revenue Recognition
Commodity futures contracts, forward contracts, physical commodities, and
related options are recorded on the trade date. All such transactions are
recorded on the identified cost basis and marked to market daily. Unrealized
gains and losses on open contracts reflected in the statements of financial
condition represent the difference between original contract amount and
market value (as determined by exchange settlement prices for futures
contracts and related options and cash dealer prices at a predetermined time
for forward contracts, physical commodities, and their related options) as of
the last business day of the year or as of the last date of the financial
statements.
The Partnership earns interest on 100% of the Partnership's average monthly
cash balance on deposit with the Brokers at a rate equal to the average 91-
day Treasury bill rate for U. S. Treasury bills issued during that month.
Foreign Currency Translation
Assets and liabilities denominated in foreign currencies are translated at
the prevailing exchange rates as of the valuation date. Gains and losses on
investment activity are translated at the prevailing exchange rate on the
date of each respective transaction while year-end balances are translated at
the year-end currency rates. Realized and unrealized foreign exchange gains
or losses are included in trading income (loss) in the statements of
operations.
Income Taxes
No provision for income taxes has been made in the accompanying financial
statements as each partner is responsible for reporting income (loss) based
upon the pro rata share of the profits or losses of the Partnership.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
(3) THE LIMITED PARTNERSHIP AGREEMENT
The Limited Partners and General Partner share in the profits and losses of
the Partnership in proportion to the number of units or unit equivalents held
by each. However, no Limited Partner is liable for obligations of the
Partnership in excess of their capital contribution and profits, if any, and
such other amounts as they may be liable for pursuant to the Act.
Distributions of profits are made solely at the discretion of the General
Partner.
Responsibility for managing the Partnership is vested solely in the General
Partner. The General Partner has delegated complete trading authority to an
unrelated party (note 4).
Prior to the dissolution of the Trading Partnership, the Trading Partnership
bore all expenses incurred in connection with its trading activities,
including commodity brokerage commissions and fees payable to the trading
advisor, as well as legal, accounting, auditing, printing, mailing, and
extraordinary expenses. In addition, the Trading Partnership bore all of its
administrative expenses. After the dissolution, the Partnership bears all of
these expenses.
Limited Partners may cause any or all of their Units to be redeemed as of the
end of any month at net asset value on fifteen days' prior written notice to
the Partnership, or such lesser period as is acceptable to the Partnership.
Although the Agreement does not permit redemptions for the first six months
following a Limited Partner's admission to the Partnership, the Agreement
does permit the Partnership to declare additional regular redemption dates.
The Partnership will be dissolved at December 31, 2020, or upon the
occurrence of certain events, as specified in the Limited Partnership
Agreement.
(4) FEES
Prior to August 1, 2000, the Partnership's trading advisor was John W. Henry
& Company, Inc. (JWH). Beginning July 1, 2001, JWH began trading its
Strategic Allocation Program with a trading allocation of $40 million.
Previously JWH traded its Financial and Metals program. JWH receives a
monthly management fee equal to 0.167 (2% annually) of the Partnership's or
Trading Partnership's (prior to September 2000) month-end net asset value, as
defined, and a quarterly incentive fee of 20% of the Partnership's or Trading
Partnership's (prior to September 2000) new net trading profits, as defined.
The monthly management fee was reduced as of October 1, 2000 from 0.33% (4%
annually). The incentive fee is retained by JWH even though trading losses
may occur in subsequent quarters; however, no further incentive fees are
payable until any such trading losses (other than losses attributable to
redeemed units and losses attributable to assets reallocated to another
advisor) are recouped by the Partnership or Trading Partnership (prior to
September 2000).
Effective August 1, 2000, Trilogy Capital Management, LLC (Trilogy) was added
as a trading advisor. Trilogy was terminated effective June 30, 2001.
Trilogy received a monthly management fee of 0.075% (0.9% annually) of the
Partnership's month-end allocated assets as defined and did not receive an
incentive fee.
Effective September 1, 2001, Mount Lucas Management Corporation (MLM) was
added as trading advisor with an initial allocation of $10 million. This
allocation represented notional funding for the Partnership. MLM receives a
monthly management fee of 0.0625% (0.75% annually) of the Partnership's
month-end allocated assets as defined. As MLM uses the MLM Index-
Unleveraged, they do not receive an incentive fee.
Effective September 1, 2001, CIS charges the Partnership or Trading
Partnership (prior to September 2000) monthly brokerage commissions equal to
0.5052% of the Partnership or Trading Partnership's beginning-of-month net
asset value, as defined. Prior to September 1, 2001, the monthly brokerage
commission was 0.5%. Monthly brokerage commissions will increase
incrementally to 0.5208% as the trading allocation to MLM increases. As of
June 30, 2002, the monthly brokerage commission is 0.5104%. The General
Partner receives a management fee of approximately 83% of the brokerage
commission charged by CIS. Net brokerage commissions are recorded in the
statement of operations as a reduction of trading income and the amounts paid
to the General Partner are recorded as management fees. Prior to September
2000, CISI received a co-general partner fee from the General Partner equal
to 1/12 of .25% of the month-end net asset value, as defined. Prior to
January 1, 1999, CISI received 1/12 of .40% of the month-end net asset value.
CISI no longer as a co-general partner and no longer receives a co-general
partner fee.
As of June 30, 2002, the Partnership has approximately $38.4 million of net
assets. JWH's allocation was approximately $38.2 million and MLM's was
approximately $16.3 million of notional funding. The General Partner may
replace or add trading advisors at any time.
A portion of assets are deposited with a commercial bank and invested under
the direction of Horizon Cash Management, Inc. (Horizon). Horizon will
receive a monthly cash management fee equal to 1/12 of 0.25% (0.25% annually)
of the average daily assets under management if the accrued monthly interest
income earned on the Partnership's assets managed by Horizon exceeds the 91-
day U.S. Treasury bill rate.
(5) TRADING ACTIVITIES AND RELATED RISKS
The Partnership engages in the speculative trading of U.S. and foreign
futures contracts, options on U.S. and foreign futures contracts, and forward
contracts (collectively derivatives). These derivatives include both
financial and non-financial contracts held as part of a diversified trading
strategy. The Partnership is exposed to both market risk, the risk arising
from changes in the market value of the contracts; and credit risk, the risk
of failure by another party to perform according to the terms of a contract.
The purchase and sale of futures and options on futures contracts requires
margin deposits with a Futures Commission Merchant (FCM). Additional
deposits may be necessary for any loss on contract value. The Commodity
Exchange Act (CEAct) requires an FCM to segregate all customer transactions
and assets from the FCM's proprietary activities. A customer's cash and
other property such as U. S. Treasury Bills, deposited with an FCM are
considered commingled with all other customer funds subject to the FCM's
segregation requirements. In the event of an FCM's insolvency, recovery may
be limited to a pro rata share of segregated funds available. It is possible
that the recovered amount could be less than the total of cash and other
property deposited.
The Partnership has cash on deposit with an interbank market maker in
connection with its trading of forward contracts. In the event of interbank
market maker's insolvency, recovery of the Partnership assets on deposit may
be limited to account insurance or other protection afforded such deposits.
In the normal course of business, the Partnership does not require collateral
from such interbank market maker. Because forward contracts are traded in
unregulated markets between principals, the Partnership also assumes a credit
risk, the risk of loss from counter party non-performance.
For derivatives, risks arise from changes in the market value of the
contracts. Theoretically, the Partnership is exposed to a market risk equal
to the value of futures and forward contracts purchased and unlimited
liability on such contracts sold short. As both a buyer and seller of
options, the Partnership pays or receives a premium at the outset and then
bears the risk of unfavorable changes in the price of the contract underlying
the option.
The notional amounts of open contracts at June 30, 2002, as disclosed in the
Schedule of Investments, do not represent the Partnership's risk of loss due
to market and credit risk, but rather represent the Partnership's extent of
involvement in derivatives at the date of the statement of financial
condition.
Net trading results from derivatives for the periods presented are reflected
in the statement of operations and equal gains (losses) from trading less
brokerage commissions. Such trading results reflect the net gain arising
from the Partnership's speculative trading of futures contracts, options on
futures contracts, and forward contracts.
The Limited Partners bear the risk of loss only to the extent of the net
asset value of their Partnership units.
The following chart discloses the dollar amount of the unrealized gain or
loss on open contracts related to Commodity Interests for the Partnership as
of June 30, 2002:
COMMODITY GROUP UNREALIZED GAIN/(LOSS
FOREIGN CURRENCIES 5,622,602
STOCK INDICES (50,094)
METALS (313,554)
INTEREST RATE INSTRUMENTS 1,553,175
ENERGIES (70,270)
AGRICULTURAL 356,572
____________
TOTAL 7,089,431
The range of maturity dates of these exchange traded open contracts is July
2002 to March of 2003. The average open trade equity for the period of April
1 to June 30, 2002 was $4,603,816.
The margin requirement at June 30, 2002 was $7,837,322. To meet this
requirement, the Partnership had on deposit with the Clearing Broker
$1,231,126 in segregated funds, $1,729,777 in secured funds and $9,919,014 in
non-regulated funds.
(6) FINANCIAL HIGHLIGHTS
The following financial highlights show the Partnership's financial
performance for the six months ended June 30, 2002. Total return is
calculated as the change in a theoretical limited partner's investment over
the entire period. Total return is calculated based on the aggregate return
of the Partnership taken as a whole.
Total return 14.64%
Ration to average net assets:
Net income 13.65%
General and administrative expenses:
Expenses 1.27%
Incentive fees 2.59%
Total general and
Administrative expenses 3.86%
The net investment income and general and administrative expenses ratios are
computed based upon the weighted average net assets for the Partnership for
the period ended June 30, 2002.
(7) FINANCIAL STATEMENT PREPARATION
The interim financial statements are unaudited but reflect all adjustments
that are, in the opinion of management, necessary for a fair statement of the
results for the interim periods presented. These adjustments consist
primarily of normal recurring accruals. These interim financial statements
should be read in conjunction with the audited financial statements of the
Partnership for the year ended December 31, 2001, as filed with the
Securities and Exchange Commission on March 31, 2002, as part of its Annual
Report on Form 10-K.
The results of operations for interim periods are not necessarily indicative
of the operating results to be expected for the fiscal year.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation
Fiscal Quarter ended June 30, 2002
The Partnership recorded a gain of $10,469,355 or $456.94 per Unit for the
second quarter of 2002. This compares to a loss of $3,358,859 or $128.90 per
Unit for the second quarter of 2001.
The Partnership continued to employ John W. Henry & Company, Inc.'s Strategic
Allocation Program (JWH SAP) as its core manager, and Mount Lucas Management
Corporation's MLM Index (Unleveraged) (MLM) for an overlay program. In
April the Fund was up 0.69%.
JWH SAP was down in the middle of April but rallied to slightly positive
after disappointing economic data and corporate earnings forced many markets
to reverse. In particular, the eventual weakness in the dollar provided
strong results in currencies. The energy sector, stock indices, and gold
were also positive, with global interest rates negative. The MLM Index
Program (Unleveraged) was essentially flat for April. The markets in the
Index were choppy as the debate on the timing of the recovery continued. The
Partnership recorded a gain of $244,008 or $9.98 per unit in April.
May was a positive month for the Fund, up 8.68%. The JWH SAP was up 9.39%.
The theme for May at JWH was the weakening of the U.S. dollar. The U.S.
'crisis in confidence' brought about by corporate accounting scandals and
constant government warnings of possible further terrorist attacks created a
widespread repatriation of assets out of the U.S. JWH SAP also had profits
in metals, with gold and silver continuing to shine. Stock index results
were mixed and the energy, interest rate and agricultural sectors were
slightly down. The MLM Index (Unleveraged) was down 0.60% for the Fund,
suffering losses in energies, grains, and softs that were larger than the
profits in metals, meats, financials, and currencies. The Partnership
recorded a gain of $2,914,124 or $127.02 per unit in May.
June saw a gain of 20.11% for the Fund. JWH SAP was up 20.37%. Continued
weakness in the U.S. dollar across the board was felt against the major
currencies. Continued accounting irregularities further depressed the stock
market while triggering a flight from the U.S. dollar. JWH SAP had profits
in interest rates and agriculturals. Losses came in metals as gold retreated
from its peak. The energy market was directionless. The MLM Index
(Unleveraged) was slightly negative (down 0.16%) for the Fund in June.
Positive results in currencies, energies, and financials were outweighed by
losses in grains, meats, metals, and softs. The Partnership recorded a gain
of $7,311,224 or $319.94 per Unit in June.
During the quarter, additional Units sold consisted of 247.44 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$472,851. Investors redeemed a total of 4,599.60 Units during the quarter.
At the end of the quarter there were 20,110.54 Units outstanding (including
77.48 Units owned by the General Partner).
During the fiscal quarter ended June 30, 2002, the Partnership had no
material credit exposure to a counter-party which is a foreign commodities
exchange or to any counter-party dealing in over the counter contracts which
was material.
Effective June 20, 2002, Teresa M. Prange resigned as Principal and Chief
Financial Officer of Everest Asset Management, Inc.
Effective August 12, 2002, Everest Asset Management, Inc. relocated its
offices to 1100 North 4th Street, Suite 143, Fairfield, IA 52556.
Fiscal Quarter ended June 30, 2001
The Partnership recorded a loss of $3,358,859 or $128.90 per Unit for the
second quarter of 2001. This compares to a loss of $4,221,518 or $151.95 per
Unit for the second quarter of 2000.
The Partnership continued to employ two different trading advisors for the
second quarter 2001. The Fund had a loss of 7.31% in April as both advisors
suffered losses. The JWH firm had reversals of trends that had created
profits in the first quarter, mostly in currencies and interest rates. The
Barclay Futures Index Program (BFIP) gave back most of its gains from March
with losses in six out of seven sectors traded. The Partnership recorded a
loss of $3,394,496 or $130.21 per unit in April.
May was a positive month for the Fund (+1.51%), with both JWH and the BFIP
showing profits. On the JWH side, currencies led the way with the dollar
showing strength against the Euro and Swiss franc. Profits were also seen in
the British pound. Interest rate positions were slightly negative for JWH,
as were overseas stock indexes and metals. The BFIP had gains in 5 out of 7
sectors traded. They were, in this order, softs, energies, grains,
financials and currencies. The two losing sectors were metals and meats. The
Partnership recorded a gain of $641,062 or $24.92 per unit in May.
June saw a loss of 1.41% for the Fund. The JWH programs were down 4.29%
coming from losses in interest rate and currency sectors. However, the JWH
losses were somewhat offset by the BFIP gain of 1.92% coming in six of their
seven sectors traded. The largest gain for BFIP came in softs, following by
metals and energies. The Partnership recorded a loss of $605,424 or
$23.61 per Unit in June.
During the quarter, no additional Units were sold. Investors redeemed a
total of 553.01 Units during the quarter. At the end of the quarter there
were 25,516.98 Units outstanding (including 198.49 Units owned by the General
Partner).
During the fiscal quarter ended June 30, 2001, the Partnership had no
material credit exposure to a counter-party which is a foreign commodities
exchange or to any counter-party dealing in over the counter contracts which
was material.
Fiscal Quarter ended March 31, 2002
The Partnership recorded a loss of $5,278,393 or $212.95 per Unit for the
first quarter of 2002. This compares to a gain of $4,275,321 or $163.15 per
Unit for the first quarter of 2001.
The Partnership continued to employ John W. Henry & Company, Inc.'s Strategic
Allocation Program (JWH SAP) as its core manager, and Mount Lucas Management
Corporation's MLM Index (Unleveraged) (MLM) for an overlay program. In
January the fund was down 0.85%. JWH SAP had a loss of 1.05%. Gains from
currency and energy positions were outweighed by losses in interest rates,
agriculture, metals and stock indices. The gains in currencies came from the
Japanese yen, Swiss franc, and the Euro. In energies, profits came from
natural gas and crude oil positions. The biggest losses came from US and
European interest rate positions. The MLM Index Program (Unleveraged) had a
gain of 0.33%. Profits were in energies and softs, losses in metals, meats,
grains, currencies and financials. The Partnership posted a loss of $355,767
or $14.17 per Unit in January.
Effective January 1, 2002, Mark S. Rzepczynski was appointed President of
John W. Henry & Company, Inc. Mr. Rzepczynski was most recently Senior Vice
President of Research and Trading. Prior to joining JWH, Mr. Rzepczinski was
Vice President and Director of Taxable Credit and Quantitative Research in
the fixed-income division of Fidelity Management and Research from 1995 to
1998. Mr. Rzepczynski holds a BA (cum laude) in Economics from Loyola
University of Chicago and an AM and PhD in Economics from Brown University.
In February the Partnership had a loss of 3.79%. The month was particularly
difficult for JWH SAP with conflicting U.S. economic data released creating
concerns as to when the U.S. recovery would start. The result was a weaker
U.S. dollar against major European currencies causing the largest sector loss
for the month. On the flip side, renewed concerns over high levels of U.S.
consumer and corporate debt provided profitable trades in the short end of
the yield curve. Energies provided minimal profits, mostly from crude.
Other commodities markets offered mixed performance. The Partnership posted
a loss of $1,561,599 or $62.68 per Unit in February.
During mid-month, the Japanese government announced the possibility of
implementing a stimulus package to include inflating the economy and larger
buy back programs in Japanese government bonds. In addition, the Japanese
government proposed a possible program to buy stocks while at the same time
introducing new regulations making short selling more difficult. These
announcements adversely moved the Japanese government bond and Nikkei against
us. Interest Rate and Stock Indices sectors were unprofitable for the month.
Conversely, the Japanese government announced that at the end of March they
would no longer guarantee time deposits in excess of 10 million yen. This
caused concerned Japanese citizens to lower their deposit amounts and in turn
purchase physical gold. The ensuing rally in gold pushed the metals sector
into positive territory.
The MLM Index Program (Unleveraged) had a loss of .75%. MLM had a reversal
of sector performance from January. All sectors were positive in February
except for energies.
Everest Asset Management has added two new branch offices to assist with our
ongoing effort to provide quality service to selling agents. A branch office
has been opened in Charlotte, NC to represent Everest on the east coast, and
a branch office has also been set up in Minneapolis, MN to assist in states
west of the Mississippi. Ruth Mignerey will be the branch manager of the
Charlotte office. Ruth graduated from Syracuse University and was most
recently Assistant Vice President and Marketing Specialist in Alternative
Investments at IJL/Wachovia Securities. Ruth has five years experience with
Wachovia in structuring, marketing and performing due diligence on futures
funds. Randy Kelsey will be the branch manager of the western office. Randy
has been with Cargill Investor Services (CIS) in Chicago between 1980 and
1997. Between 1997 and 2001, Mr. Kelsey was a Senior Quality Consultant at
Cargill, Inc. in Minneapolis. While at CIS, Mr. Kelsey acted as a wholesaler
for the JWH Global Trust, a publicly offered trust also traded by JWH.
In March the Fund had a loss of 8.56%. Both managers were substantially down
for the month. The Partnership posted a loss of $3,361,027 or $136.10 per
Unit in March.
JWH had a loss of 5.73%. For the JWH SAP, March was a disappointing month
despite positive returns from the energy, interest rate, metals and
agricultural sectors, which were over powered by losses in currencies and
indices. Japan's fiscal year end in March played a key role in producing
negative results from yen-denominated markets. Japanese corporations
repatriating yen for year-end purposes initially put heavy downward pressure
on the USD yen from a level just shy of 134. However, a Japanese government
official drew a line in the sand calling for a floor at a USD yen level of
125 126. Probably more influential was the announcement by Japanese
regulators tightening short selling rules on the Nikkei higher from short
covering and simultaneously moving USD yen and yen crosses lower. The USD
yen market quickly reversed when the Japanese Government Pension and
Investment Fund announced a JPY 7 trillion larger allocation to non-
government fund managers for the new fiscal year. Fifteen percent of these
assets would be allocated to non-Japanese markets, creating a demand for non-
yen currencies. This brought USD yen quickly above the 132 level. Needless
to say, this type of volatility created a very difficult trading environment.
The energy sector turned in a solid performance, with each market in positive
territory by taking advantage of the up trends. Support for higher prices
came from stronger-than-anticipated economic numbers from the U.S. This
provided strength to OPEC's announcement in Vienna on March 15th, when they
determined there would be no changes in production, at least until the next
meeting on June 6th. Additionally, the U.S. Administration's overtures
towards Iraq gave further fuel to higher crude prices and put doubt on the
United Nations renewing the "Oil for Food" programs for Iraq, which ends in
May. Drawdowns in the U.S. stockpiles this month in crude and energy
products also provided strength to the markets.
Currencies were particularly hard hit this month. As mentioned previously,
USD/yen and yen crosses were problematic. The U.S. dollar against the
British pound, Swiss franc and Euro traded in a directionless fashion,
resulting in losses as well. The South African rand was especially volatile
after two relatively quiet weeks, resulting in trading losses. Minor
currencies, including the Australian and New Zealand dollar, provided small
bright spots with marginal profits.
Global indices were demanding because of the conflicting sentiment
surrounding both country specific and worldwide economic recovery. The
Nikkei, DAX, Eurostoxx and NASDAQ all started the month on a positive note,
but either failed to continue or simply faltered and reversed trend, causing
losses in these markets.
Profits in interest rates in Europe, Canada and Australia marginally
outweighed losses in the United States and Japan. The Euro-Bund, Euro-Bobl
and Australian 3-year bond futures provided solid profits from the well-
defined downtrend. U.S. interest rates, which had been trending higher on
fears of double dip recession in February, turned sharply lower early in
March and experienced range bound trading for the remainder of the month,
which provided little opportunity for profits.
Metals were all positive with the exception of aluminum. Current over-supply
conditions in aluminum made it difficult to keep pace with other base metals,
copper, nickel and zinc, that trended higher as a result of inventory
building in the U.S. Gold and silver continued to benefit from inflationary
fears as nominal rates of return remain very low.
MLM Index Program (Unleveraged) had a loss of 5.88% for the month, but the
effect on the Fund was a loss of approximately 2.96% since the MLM Program is
only one-half allocated for the overlay.
Dramatic market reversals, particularly in the energy markets, spurred by the
notion of a U.S. economic recovery and escalating tension in the Middle East
resulted in a very difficult March for the MLM Index. Though certainly
within the range of historical experience, this kind of result is definitely
on the lower end of expectations for monthly returns of the Index. As noted
last month, the Index was positioned for continued weakness in commodity
prices and firmness in the bond market. As a result of the action during the
month, the Index now has a much more balanced exposure to the commodity
markets and currency markets, and is short the U.S. bond markets. The change
in positions after a difficult month demonstrates the self-correcting nature
of the MLM Index technology. While there can be no assurance that the new
exposures will be successful, Mount Lucas Management Corporation believes
that the Index discipline limits the single position risk.
During the quarter, additional Units sold consisted of 4.09 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$5,941. Investors redeemed a total of 647.27 Units during the quarter. At
the end of the quarter there were 24,462.69 Units outstanding (including
77.48 Units owned by the General Partner).
During the fiscal quarter ended March 31, 2002, the Partnership had no credit
exposure to a counterparty, which is a foreign commodities exchange, or to
any counter party dealing in over the counter contracts, which was material.
Fiscal Quarter ended March 31, 2001
The Partnership recorded a gain of $4,275,321 or $163.15 per Unit for the
first quarter of 2001. This compares to a loss of $5,502,945 or $200.52 per
Unit for the first quarter of 2000.
The Partnership continued to employ two different trading strategies for the
first quarter 2001. The Fund was down 1.08% in January. The John W. Henry &
Company Financial and Metals Portfolio (JWH) was profitable for the month due
to interest rate positions. A significant portion of the positive returns
occurred during the last days of the month surrounding the Fed cut in rates
on January 21st. In spite of the unusual action of two 50 basis point rate
cuts by the Fed in a single month, bond prices actually declined by just over
2 points for January. All the remaining sections traded, currencies, non-US
stock indices and metals, incurred losses. The Barclay Futures Index Program
(BFIP) had an allocation of approximately 50% of the Fund's assets for the
first quarter 2001. In January the Index had a decline for the Fund of
6.03%. The largest losses came in the energies and grains and overall six of
the seven sub-indexes (or sectors) were negative. The only exception was
profits in softs, especially sugar. All in all, the Partnership posted a
loss of $455,012 or $17.43 per Unit in January.
The Fund was up 0.78% in February. The JWH allocation was again positive
with gains in short term interest rates. The short term rates reacted to
central bank easing and the massive rally in the Japanese government Bond as
the Japanese economy showed signs of sputtering, realized gains. After
eliminating their zero interest rate policy last August because of the belief
that a recovery was around the corner, the Bank of Japan is again following a
monetary policy of easing as rates were brought down 15 basis points. The
Japanese stock market reacted and the Nikkei stock index hit a 15 year low
during February. Currencies suffered losses for the month as they were
affected by a weakening in the euro, which offset some of the earlier gains
from the beginning of the year. Late in the month, the euro tumbled to two-
month lows against the dollar in the wake of Turkey's lira currency float.
Market concerns about European bank exposure to Turkish assets helped push
the euro, already trending lower during the month, to fresh troughs. Metals
were slightly unprofitable for the month. The BFIP allocation of the Fund
lost 1.35%. The passive index had losses in metals and currencies and
profits in meats, softs, and energies. Overall, the Partnership posted a
gain of $318,381 or $12.51 per Unit in February.
The Fund was up 10.42% in March. The JWH program was up 12.88% with all four
sectors being profitable. Currencies led the way due to continued weakness
in the Japanese yen, although the other currencies were also profitable.
Declining interest rates also helped for the month, led by the Euro Bund and
the Japanese government bond. Many attributed the strength in bond prices to
be the result of the 'flight to safety' due to continued weakness in the
equity markets. Stock index trading was mixed and there was a small gain in
metals. The BFIP gained back its losses from January and February with a
positive 7.49% result in March. The gains came in the softs, metals, grains,
currencies and energies. Smaller losses came in meats and financials.
Overall, the Partnership posted a gain of $4,411,952 or $168.07 per Unit in
March.
During the quarter, additional Units sold consisted of 1026.49 limited
partnership units; there were no general partnership units sold during the
quarter. Additional Units sold during the quarter represented a total of
$1,656,356. Investors redeemed a total of 1,060.18 Units during the quarter.
At the end of the quarter there were 26,069.99 Units outstanding (including
198.49 Units owned by the General Partner).
During the fiscal quarter ended March 31, 2001, the Partnership had no credit
exposure to a counterparty, which is a foreign commodities exchange, or to
any counter party dealing in over the counter contracts, which was material.
See Footnote 5 of the Financial Statements for procedures established by the
General Partner to monitor and minimize market and credit risks for the
Partnership. In addition to the procedures set out in Footnote 5, the
General Partner reviews on a daily basis reports of the Partnership's
performance, including monitoring of the daily net asset value of the
Partnership. The General Partner also reviews the financial situation of the
Partnership's Clearing Broker on a monthly basis. The General Partner relies
on the policies of the Clearing Broker to monitor specific credit risks. The
Clearing Broker does not engage in proprietary trading and thus has no direct
market exposure, which provides the General Partner assurance that the
Partnership will not suffer trading losses through the Clearing Broker.
Item 3. Quantitative and Qualitative Disclosures
About Market Risk
There has been no material change with respect to market risk since the
"Quantitative and Qualitative Disclosures About Market Risk" was made in the
Form 10K of the Partnership dated December 31, 2001.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Partnership and its affiliates are from time to time parties
to various legal actions arising in the normal course of business. The
General Partner believes that there is no proceedings threatened or pending
against the Partnership or any of its affiliates which, if determined
adversely, would have a material adverse effect on the financial condition or
results of operations of the Partnership.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit-27
b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
EVEREST FUTURES FUND, L.P.
Date: August 15, 2002 By: Everest Asset Management, Inc.,
its General Partner
By: __/s/ Peter
Lamoureux______________________
Peter Lamoureux
President
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the accompanying second quarter report on Form 10-Q of
Everest Futures Fund, L. P. for the quarter ended June 30, 2002, I, Peter
Lamoureux, President and Treasurer of Everest Asset Management, Inc., General
Partner, Everest Futures Fund, L. P., hereby certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, to the best of my knowledge and belief, that:
(1) such quarterly report on Form 10-Q for the quarter ended
June 30, 2002, fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act
1934; and
(2) the information contained in such quarterly report on Form
10Q for the quarter ended June 30, 2002, fairly presents,
in
all material respects, the financial condition and results
of
operations of Everest Futures Fund, L. P.
EVEREST FUTURES FUND, L.P.
Date: August 15, 2002 By: Everest Asset Management, Inc.,
its General Partner
By: /s/ Peter Lamoureux
Peter Lamoureux
President and Treasurer